I would like some advice from landlords or accountants. I am coming to the end of my 5 years buy to let fixed term mortgage. The new rate I will be paying will be almost 3 times more interest then I was previously paying. Would I be better off paying off my buy to let mortgage if I am in a position to do so? Or will I be missing out on tax relief by paying off the mortgage?
Have you had any quotes for a re-mortgage or rate swap from a broker? They may be able to do better than that. You may also be able to make a partial payment and re-mortgage for a smaller sum.
Its hard to know what the next government will do with mortgage interest tax relief. They could scrap it altogether. So hard to advise really.
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It depends on the opportunity cost of the money - ie what else you would do with it.
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If the money you’d make from investing the cash you have would be less than the money you’d spend paying interest on the loan, I’d pay it off.
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I have the money in savings account at the moment. The interest is lower then what I would be paying to remortgage my property.
I’m not yet in a position to buy another property so the money is just sitting in a bank.
My LTV is already 40% so mortgage is quite low. I have sought advice from my broker and he suggest I continue to remortgage in case I need the money in future.
Did your broker sell you the mortgage ?
More to the point will he be selling you the mortgage renewal
If it were me I’d pay off the mortgage if the numbers add up.
You are paying unnecessary interest probably more so on the loan than the gains you are getting in the back .
Paid up is one less debt
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Yes, he found me my mortgage years ago and now the deal is ending, will be helping me to find best interest rate for remortgage.
I think the general census I’m receiving from this forum is probably to pay it off and be mortgage fee. Avoid any further lending cost and interest fees.
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Ebru,
It is difficult to tell which way to go without values and INT payable.
I can suggest the following,
1 - bear in mind , if you mortgage deal INT goes up compare it with your INT on your savings.
2 - how much longer do you want to keep renting
3 - If you sell , will you get a good return?
4 - may be work out a partial payment towards your current mortgage deal to reduce the new monthly repayment to bring it closer to your current value, if you can. (as you mentioned you have some savings )
I can think of some other options but I think these are the main ones.
Hope this helps !!
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He’ll also be getting a commission if he helps you remortgage!!
When my father passed I was advised to pay off the mortgage
Best advice I got.
Removes the noose from around your neck
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Not enough info. But in general, in times of uncertainty, hang on to cash. You can get 5% even instant access. Once you paid down a part of the mortgage, you’ve lost all flexibility
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Depends entirely on what your future plans are and if any other investments and how they are performing.
The broker makes money from remortgaging, you need to ignore entirely what they say.
If you are planning on getting another BTL in a few years, then paying it off now and then releasing equity when rates are probably/possibly lower is worth considering.
I like having quick access to cash
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Paper today
Interest rates are currently at a 16-year high of 5.25 per cent, meaning borrowing costs – for example for those getting [mortgages ]– are higher than they have been in the recent past.
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It depends. You need to do the figures and work that out. Your tax bracket will almost certainly affect the calcs.
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I am a higher tax payer so hit the 40% tax. I will speak to my accountant for some advice.
Thank you for all your responses.
In 1979 bank base rate was 17% ! . Sorry can’t offer any advice but take a look at historic base rate , double figures for a lot of the 70s and 80s ,if that came back now that would be scary for a lot of people.
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We’re in exactly the same situation. And our rate would go from 2.3% to 10% next month. So, we’re ready to pay it off on 1/07 and get done with it. Will be having all this extra money each month ))).
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If you haven’t got any option to better invest your saving money to bet mortgage interest than I would advise you to pay off the mortgage. However, you may have to pay tax when you sell your property. So my best advise will be to bring the mortgage balance minimum amount so that you still got mortgage of couple £100 -£200 still going on with your property and you still have some on savings too. That was what i would have done.
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As others have said the tax bracket is important and you do still get relief at 20% on the interest.
I would think a partial payment to bring it right down might be a good option. I’ll be in a similar situation in two years and i have 2 flats with mortgages. I’ll try and pay off one of them to save in remortgage fees, but still keep below 40% ltv to get the best rate.
Depends how much spare cash you. I’m also planning to buy a 3rd, but not at these rates!
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Could you clairfy, please? If you still are paying mortgage during the sale, you don’t pay tax? Which tax is it, please?
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